this $100. this is how some people imagined national currencies could move to a block chain. the value, the believe that should happen, is driven by the math and cryptography that underlines the bitcoin system and that some people think is more secure and stable than the existing financial arrangement. so far, it has not proven to be so, but i think there is some hope that the math and cryptography that makes bitcoin work could be more secure than the systems we have, where j.p. morgan or credit suisse or bank of america is in charge of the ledger and you have to trust bank of america to handle that properly. banks themselves have been vulnerable to hacking attacks.

they generally have not lost money, but that sort of thing is this conversation going, over whether it would be better to have a cryptographic solution like bitcoin. host: washington, d.c., 14 -- jo aquin. caller: i was hoping you could elaborate more on security. bitcoin is built essentially a startup. all of these companies have gone down due to cyber attacks and lost a lot of money for themselves and for people starting to use bitcoin. they may not feel it is more of a risk area can you talk more about that threat landscape and some challenges they have to overcome? maybe what the winklevoss twins are doing to make that it'll currency more secure.

guest: the strength and weakness of bitcoin comes down to the fact that the ownership of your bitcoin and your bitcoin address is tied up in this private key which is essentially a string of 64 letters and numbers. it is unique to you and your bitcoin address. if you control that, you can unlock your bitcoin addressed without a third party and spend your bitcoins. if you keep those 64 digit secure, your money is secure. no one can hack in to your address. but if you have those 64 digits written down and leave in a cafe and someone gets a hold of it they have your bitcoins and have access to your bitcoin address. if you live it on your desktop and someone asked computer, they

can similarly get access to your bitcoins and transfer them. a lot of what is happening around bitcoins security is about securing that address. increasingly, people are moving to what are known as multi-signature laws, or you need to ban secret keys. you have one and maybe a company a bitcoin bank for a security company keeps the other one and make sure that if you sign with your address, it is really you signing with it. it is getting these increasingly sophisticated security regimes people are coming up with. then you move back towards the old system where you have that third-party have to rely on. winklevoss twins are trying to come up with their exchange and security is a big part of what they are working on. that is part of the reason they want regulation. they want regulators to say you

guys are doing this right, you'll have good security, your securing clients properly. by that comes with the regulations that we started this whole thing talking about. it is a difficult moment that bitcoin is at. it has this sort of super security that if you do not have that 64 digit password, you cannot get the bitcoins. but once you have it, you have total access. it is something everyone in the bitcoin community is working on. the danger and promise of bitcoin. host: do you your cell phone bitcoins? guest: at the time, we made the decision this is like covering a company and owning stock in the company. you did not want personally investment. if you're covering apple, you do not want to own apple stock and worry about your stocks can go up and down.

i own enough that i can play with it and understand the components of the system, but not enough where i have financial interest. host: injured in san antonio hello. caller: hello. i want to thank you. i am calling from a hospital bed and san antonio. i heard about bitcoin mining. and you elaborate on that and let us know what that entails. guest: bitcoin mining is the way people refer to the process of creating new bitcoins. a reference to gold-mining. you do work to dig up old, today up new bitcoins. the way the system works is new bitcoins are released every 10 minutes or so to people using the system.

essentially, what i mentioned earlier, it is like a lottery. people using the system enter in a sort of lottery to win bitcoin s. the way the lottery works is you need very fast computers to essentially make a lot of lottery gases -- guesses. the more you make, the more you can win. you could do that with a laptop or early on, but now there are so many people computing -- competing, you now need specialized hardware made exclusively for bitcoin mining. it is expensive and it has become dominated a few companies that have gotten good at manufacturing these special chips and getting cheap electricity. a lot of the bitcoin mining is happening in china, where there is cheap hardware, an